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Benita Beneva
8 July 2016
The new dividend tax – how it works?
Dividend tax change – the winners and losers?

The start of the new tax year marks the introduction of the new dividend tax. Telegraph Money explains how the tax will work in practice, and who the winners and losers will be.

The new dividend tax – how it works?
The first ?5,000 of dividend income in each tax year will be tax-free. Sums above that will be taxed at 7.5pc for basic-rate taxpayers,
32.5pc for higher-rate taxpayers and 38.1pc for additional-rate (45pc) taxpayers. The new tax takes effect from April 6 2016.

The winners !
The Government has claimed that more than three quarters of those who receive dividend income will either gain or be unaffected by these changes.
It has estimated that around a million individuals will pay less tax reduction on their dividend income thanks to the new regime.

The losers !
Those who have large dividend incomes will pay more.
A share portfolio of ?100,000 with a yield of 5pc will generate ?5,000 a year in dividends. This will use up the entire annual dividend allowance, so tax will be payable on any excess.


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